Paradigm Alliance v. Celeritas Technologies
| Decision Date | 22 September 2009 |
| Docket Number | Case No. 07-1121-EFM. |
| Citation | 659 F.Supp.2d 1167 |
| Parties | The PARADIGM ALLIANCE, INC., Plaintiff/Counterclaim Defendant, v. CELERITAS TECHNOLOGIES, LLC, and Celeritasworks, LLC Defendant/Counterclaim Plaintiff, v. Ken Wilkerson, Third Party Defendant. |
| Court | U.S. District Court — District of Kansas |
Brian P. Baggott, Michael S. Cargnel, William R. Sampson, Shook, Hardy & Bacon LLP-KC/Grand, Mark D. Katz, Steven F. Coronado, Sherman Taff Bangert Thomas & Coronado, P.C., Kansas City, MO, Kurt A. Harper, Sherwood, Harper, Dakan, Unruh & Pratt, LC, Wichita, KS, for Plaintiff/Counterclaim Defendant.
David R. Barnard, James Moloney, Jason C. Parks, Justin M. Nichols, Lathrop & Gage, LLP-KC, Kansas City, MO, Jack A.J. Focht, Foulston Siefkin LLP, Wichita, KS, for Defendant/Counterclaim Plaintiff.
This lawsuit is before the Court as a result of a failed business venture. Plaintiff The Paradigm Alliance, Inc. (Paradigm) produces geographic information systems (GIS) that provide public awareness information for pipeline safety. Utilities and pipeline companies utilize public awareness data to identify those who may be affected by operations within a designated geographical zone, thereby allowing them to identify and notify affected residences and businesses, emergency responders, or excavators to the presence of the pipeline within their respective boundaries in compliance with federal regulations. Defendants Celeritas Technologies, LLC, and Celeritasworks, LLC (collectively "Celeritas"), provide Information technology (IT) services, including application development and infrastructure management. Paradigm claims that it and Celeritas entered into a business relationship to jointly develop and own a Community Awareness Cartridge (the Cartridge),1 and during the course of that relationship, entered into various agreements where Paradigm provided Celeritas with confidential information. As a result of various alleged conduct by Celeritas, Paradigm filed suit, alleging Celeritas violated the Computer Fraud and Abuse Act,2 along with state law breach of contract, breach of fiduciary duty, misappropriation of trade secrets, conversion, and fraud claims. Celeritas subsequently filed several counterclaims against Paradigm and Third Party Defendant Ken Wilkerson (Wilkerson). Celeritas now moves for summary judgment with respect to all of Paradigm's claims (Doc. 261). Paradigm also moves for summary judgment on all counterclaims (Doc. 259). For the reasons explained below, we grant in part, and deny in part Celeritas' motion, and grant in part, and deny in part Paradigm's motion.
The following facts are either uncontroverted or taken in the light most favorable to the non-moving party.
On October 8, 2003, while at a pipeline industry convention, Celeritas marketed a number of its SpatialObjects" applications, which included its Municipality Cartridge Oil & Gas Cartridge, Telecom Cartridge, Utility Cartridge, and Tower Management Cartridge. During this convention, Paradigm's then President, Mark Allen (Allen), met Celeritas' representatives who demonstrated Celeritas' Spatial Objects"/Spatial Data Portal."
Prior to attending this convention, Paradigm had identified the need for a web-based, public awareness product to allow its customers the ability to access, view, and update their Audit Documentation and other public awareness data over the Internet.3 In response to that need, in September 2003, Paradigm hired a computer programmer, Ragu Vamshi, to develop a GIS public awareness software application. Mr. Vamshi reviewed Paradigm's concepts and required specifications for a web-based product, and identified the software and hardware required for the product's development. However, after realizing Celeritas' capabilities at the October conference, Paradigm believed that it might be more efficient to work with Celeritas to develop a web-based product rather than design one in-house. Thus, Allen informed other Paradigm employees of Celeritas' product, explaining that he felt it met Paradigm's "quest to project [its] documentation on the web."4 Thereafter, on October 15, 2003, Paradigm met with Celeritas' representatives for a sales demonstration of its SpatialObjects"/Spatial Data Portal" product, where Paradigm received information on Celeritas' existing cartridges. After this meeting, Celeritas sent Paradigm a SpatialObjects&" Questionnaire to gather information about Paradigm's current GIS implementation along with its plans for a SpatialObjects&" project. It also provided Paradigm with an initial requirements document to allow Paradigm to define various data fields and layouts that might be required by the project.
After the parties' October 15, 2003 meeting, Paradigm received a letter from Celeritas' Brett Lester,5 wherein he stated his belief that the meeting presented "interesting and exciting partnership possibilities."6 The following day, Paradigm claims Allen called Lester, and during that conversation, Lester defined the partnership as one where Celeritas and Paradigm would co-develop, co-own, co-market, and co-sell the Cartridge. Through this arrangement, Paradigm would contribute the concept, its industry knowledge, data, and GIS processes while Celeritas would contribute its expertise in code-writing and its software background. Paradigm also alleges that Lester informed Allen that Paradigm would be both a co-developer and co-owner with Celeritas in the Cartridge, and they would share in the revenue generated, regardless of which party generated the sale. After his discussion with Lester, Allen informed Paradigm's management of the proposal, after which they determined that accepting Celeritas' offer would result in faster product development without significant costs. Thus, Paradigm ceased development of its own product using its in-house programmer.
As a result of their discussions, on November 7, 2003, the parties executed a Confidentiality and Non-Disclosure Agreement that imposed upon Celeritas certain disclosure and use restrictions regarding information disclosed by Paradigm and identified as confidential. Subsequent to that agreement and at Celeritas' request, on January 5, 2004, the parties' executed a Mutual Non-Disclosure Agreement to protect not only Paradigm's confidential information, but also any confidential information disclosed by Celeritas to Paradigm.
In November 2003, the parties began to develop the Cartridge. During development, Paradigm disclosed its GIS processes, along with providing the data layers, or datasets, derived from those processes for certain Cartridge implementations.7 Celeritas then took this information, along with the "Shell Data"8 received from Paradigm, and completed a prototype for demonstrating the Cartridge to individual customers at trade shows and other marketing events.
In late January 2004, the parties met to discuss the marketing and sales of the Cartridge and developed a Software Product Description (Product Description) that included a summary of the product's functionality, screen shots, descriptions, figures, and examples of data output from the prototype Cartridge. A complete "Media Kit" was developed by the end of January containing flash videos of the Cartridge, the Product Description, a PowerPoint presentation of the Cartridge, and other marketing materials.9 Some time thereafter, Celeritas forwarded to Paradigm a "Partnering Document" that outlined the parties' mutual goals and expectations, defined the intent of their "partnership,"10 and identified the percentage of compensation each would receive for sales depending on which party initiated the lead.
On February 19, 2004, Celeritas filed a provisional patent application (Provisional Application) for the Cartridge with the United States Patent and Trademark Office (Patent Office). While Celeritas included within the Provisional Application the Product Description developed by the parties, Paradigm claims that Celeritas altered the description by removing all indications of Paradigm's contributions to the Cartridge along with any suggestion that Paradigm had any ownership in it. The Patent Office did not publish or otherwise make available to the public the Provisional Application, nor did Celeritas notify Paradigm of it either prior to or after its filing.
In April 2004, Allen and Lester began to work on a Service Agreement in which the parties intended to state, in general terms, the provisions by which Celeritas would perform services and provide software support, website hosting, internet access and other services to Paradigm's customers. After completing a first draft of this document, Allen, upon Lester's recommendation, provided it to Paradigm's attorney, Bill Dakan, to review and revise as needed. Mr. Dakan admitted that the Service Agreement was neither intended to memorialize that a joint venture existed, nor was it intended to eliminate any partnership or joint venture that may have existed or redefine such a relationship to that of an independent contractor. Incorporated within the Service Agreement was the parties' Joint Marketing Plan, in which the parties expressed the importance of each maintaining the image of not competing with the other in their relevant market. Also integrated in the Service Agreement was a Sample Software License Agreement that identified Celeritas as an independent contractor and not a partner or joint venturer with Paradigm. The parties never executed the Service Agreement or any of the incorporated documents.
In late September 2004, Celeritas provided Paradigm with a proposed Reseller Agreement. While the parties had negotiated this agreement, Paradigm contends that it was surprised by Celeritas' initial draft as the provisions within were in stark contrast to the...
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